Crown Commercial Services turn screws on Commodity IT suppliers

'We're extending the deal. Oh, and changing it quite a lot'

Crown Commercial Services is turning the screws on suppliers operating on the Commodity IT Hardware & Software framework by cutting margins and ruling that all orders over £250k will require special approval.

These new terms come into effect on 1 March and run for eight months, following CCS's decision to extend the agreement, which expires on 28 February, under extraordinary circumstances because no replacement procurement vehicle is ready.

All 19 suppliers on the framework today received notification of the new plans from the fun-loving officials at the CCS.

"CCS is extending it on the condition that we'll drop our price by 0.3 per cent," one of the suppliers we contacted told us, "but bear in mind we make a contracted 2 per cent margin of which 0.7 per cent goes to CCS."

This one per cent maximum margin could deter some suppliers from bothering with the framework, were it not for the timing - March is the largest month for the public sector as buyers flush out their year-end budgets.

The second clause inserted by the folk at CCS is that any deals over quarter of a million pounds will need to be flagged because they want to intervene - presumably to force through an even more aggressively priced deal.

"This is happening at the beginning of March which is the biggest month for orders in our year - and the biggest month for orders over £250k. CCS is making it hugely unwieldy," said one of the hard pressed CITHS 19.

"It will definitely create a bottleneck, there will be loads of orders over £250k, and if they need to manage, to intervene and do a better job, it will slow everything down and budgets won't get spent," he added.

CITHS was introduced 1 March 2010, and was set to run for three and a half years with the option to extend it by a further six months. CCS has to seek a special extension, not included in the original tender, because it was unable to get the successor, IT PASS, up and running in time.